Low Carbon News in Malaysia in December 2013
New Electricity Tariff for 2014
2 December 2013
Effective from 1st January 2014, the new electricity tariff will be put in place in line with the Government’s aspiration towards gradually phasing out energy subsidies through the Subsidy Rationalisation Programme. Kindly find below, the relevant quick facts about the new electricity tariff:
– 70.7% (4.6 million) domestic customers are not affected
– No tariff increase for the first 200kWh monthly consumption
– No tariff increase for monthly consumption from 201kWh to 300kWh
– Rebate from the government for customers with monthly bill of RM20 or below is still maintained
– Domestic Tariff band is reduced to 5 bands from 9 bands for better understanding of the bill
The new electricity tariff setting methodology is based on the economic regulatory framework called the Incentive Based Regulation (IBR). It was introduced by the Energy Commission (Suruhanjaya Tenaga) to enhance the operational efficiency and transparency towards maintaining a reliable and sustainable electricity supply. It is important for the nation to have a sustainable power industry to drive economic growth to enable Electricity Company to meet rising costs of supply, reinvest in aging supply equipment and continue making improvements in providing reliable and quality electricity supply.
Some key highlights of the new electricity tariff are as the following:
For Domestic Consumers
The tariff will remain unchanged at 21.8 sen/kWh for the first 200kWh consumption per month – this constitutes nearly 50.4% (or 3.25 million) of all domestic users who pay RM43.60 or less monthly.
About 20.3% or 1.3 million customers who fall in the consumption band from 201kWh to 300kWh will not experience any increase at 33.40 sen/kWh.
On average, the domestic customers will experience an increase of 10.6% (3.03 sen/kWh).
For Commercial Consumers
The change in average tariff will be 6.91 sen/kWh.
10% discount for welfare homes, government schools, government institutions of higher learning and places of worship is maintained.
University teaching hospitals which are fully funded by the government under the Ministry of Education (USM, UKM & UM) will also enjoy 10% discount.
For Industrial Consumers
Special Industrial Tariff (SIT) for water and sewerage operator will be given automatically.
In parallel with the implementation of IBR, the Government will also introduce an Imbalance Cost Pass Through (ICPT) mechanism for the power sector. Under the ICPT, the fuel cost will be reviewed every six (6) months and any changes (upward or downward) in the fuel cost due to the fluctuation in the fuel prices (namely gas, LNG, coal and alternative fuel) will be passed through in the end-user tariff.
To help the public manage their electricity consumption more responsibly, Electricity Company will continue its efforts in educating the public through its Energy Efficiency Campaign.
References: http://www.tnb.com.my/residential/pricing-and-tariff.html
Prepared by: Teh Bor Tsong, Universiti Teknologi Malaysia